The WasteWatcher: The Staff Blog of Citizens Against Government Waste

DOE Doublespeak: The “Profit” in Solar Energy Loan Programs?

The WasteWatcher is the staff blog of Citizens Against Government Waste (CAGW) and the Council for Citizens Against Government Waste (CCAGW). For questions, contact blog@cagw.org.


George Orwell would feel vindicated. As he wrote in his blistering essay, “Politics and the English Language” (1946), “…[the English language] becomes ugly and inaccurate because our thoughts are foolish, but the slovenliness of our language makes it easier for us to have foolish thoughts… In our time, political speech and writing are largely the defense of the indefensible.”

More recently, a federal government loan program, whose proponents acknowledge may actually lose money, is ballyhooed by the media to be turning a profit.

From the November 13, 2014 edition of The Washington Post, Max Ehrenfreund (writing for WaPo’s “Wonkblog”) observes, under the headline, “Remember Solyndra? Those loans are making money”: “…the Department of Energy’s loan program is expected to make money for taxpayers.” And this from the lefty apologist Paul Krugman (The New York Times, November 16, 2014): “…the program that included Solyndra is, in fact, on track to return profits of $5 billion or more.”

“Unfortunately, that’s not true,” wrote Donald Marron in Forbes. “Taxpayers are losing money on DOE lending. Less than originally expected, and less than you would expect given media coverage of Solyndra, Fisker, and a few other failed loans. But smaller losses are still losses, not profits.”

Essentially, the case that proponents make is this, as described in Forbes (November 17, 2014). Loans and loan guarantees issued ($30.29 billion), plus conditional commitments ($3.96 billion), amount about $34.25 billion in guarantees for which taxpayers could be on the hook. But so far, only $21.71 billion has been disbursed, with $3.49 billion (roughly, a respectable one-sixth) in principal already repaid. The proponents further argue that Interest Earned* amounts to $810 million, while loan losses are less, at (only?) $780 million, apparently yielding a $30 million profit.

Of course, few, if any, have highlighted the fact that this purported “profit” amounts to a negligible one-sixth of one percent of the outstanding principal. It sounds a lot more like a rounding error.

And footnotes, like facts, are stubborn things. That little asterisk (*) after the heading “Interest Earned” alludes to the following footnote from the Department of Energy’s report: “Calculated without respect to Treasury’s borrowing cost.” Given that this cost is borne by taxpayers, it is entirely conceivable that even this minuscule “profit” is erased.

To his credit, Ehrenfreund quickly tried to redeem himself a few days later in his November 18, 2014 “Wonkblog” post, under the heading, “Why the government’s claim that the Solyndra program is earning interest may be misleading.” While his earlier thesis (“Those loans are making money”) may have been grammatically accurate – the loans were actually earning interest, therefore “making money” – there is little evidence that the program will turn a profit over its 22-year repayment term. Marron writes, “It’s technically true, but tells you nothing about profits.” So, some of the “misleading” was perpetrated by Ehrenfreund’s own pen. He comes clean in the end: “Relative to the massive scale of the loans, the program is close to breaking even either way, but there's still a difference between profit and loss.”

While the Wonkblogger was not alone in distorting the truth, he acted responsibly by correcting the record rather quickly. But whither the rest?

Sloppy reporting? Well, George Orwell might use the term “slovenly.”

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